THISDAY ECONOMIC INTELLIGENCE UNIT (TEIU), working with Capital Assets Limited, a leading investment house based in Lagos, decided to focus its binoculars on wealth-creating abilities of banking stocks, tracking how much an investment of N1 million would have fetched an investor in each of the banking stocks over five years.

The report looked beyond financial results released into the public space by the nation’s banks to show how much value each of the banking stocks added to the simulated investment of N1 million. The accompanying tables below shed more light on the report.


In evaluating the wealth-creating abilities of the banking stocks, we used three fundamental measuring indices namely: the gains from price appreciation, dividend income and bonus shares accrued in the last five years (2018-2022). Corporate action such as a share reconstruction exercise for instance was also considered in estimating the total return on investment of N1 million on these shares between January 2018 and November 2022.

The methodology was adopted to simulate the performance of an actual portfolio that has been structured to hold these banking stocks in equal proportion without restructuring. This methodology also provides an opportunity to compare the performance of the respective banking stocks, identify the outliers, either as best performing or otherwise, and the possible factors for such performance or otherwise.

A total of 14 banking stocks were evaluated for this report. The analysis shows that four banks had negative returns while 10 had positive returns. The performance can be further reviewed as follows:


When all three wealth-creation indicators were combined, we found that three banking stocks: FCMB, Wema and Fidelity, created the most wealth for investors. An investment of N1 million in FCMB over five years would have earned the investor about N1.7 million, a gain of about 106.9 per cent. A similar investment in Wema Bank would earn the investor N1.3 million or 132.69 per cent while Fidelity showed a total return of N1.05 million or 104.88 per cent.

With a total return of N1.7 million on an N1 million invested, FCMB’s performance was about N1.3 million more than the industry average, which stood at N391,000 while Wema Bank performed above the industry average by N935,000. Overall, only seven of the 14 banks covered performed above the industry average in total return.

ETI, GTB, UBN and Unity Bank, however, had negative returns of 37.06 per cent, 17.3 per cent, 10.26 per cent and 5.66 per cent respectively.


Our analysis showed that within the review period, Wema Bank topped as the bank with the highest gain from price appreciation with a gain of 488.46 per cent, followed by FCMB with a gain of 119.59 per cent.

A review of the gains from price appreciation showed that only six banks recorded an increase in share price while eight banks recorded a decline in share price as of the closing period. Guaranty Trust Holding Plc declined the most by 52.27 per cent, followed by ETI at 41.18 per cent and UBA at 30.58 per cent. Price appreciation evaluates the gains in the current price compared with the purchase price.


Zeroing in on the dividend component of the evaluated total returns, our analysis showed that Zenith Bank paid the highest dividend income with N563,572.54 amounting to 56.35 per cent on invested funds followed by FCMB with N493,243.24 and UBA with N409,439.02. The bank with the least dividend payment was ETI with a dividend income of N41,176.47, while Unity Bank did not pay any dividends during the period.

It can be deduced from this review that banking stocks give good cash returns to investors and are, therefore, suitable for portfolios with cash return objectives.

The total returns on the investments of N1 million each on these banks have been compensated for by the dividends accrued in the last five years. Thirteen of the 14 banks paid dividends within the last five years.


Only Stanbic IBTC issued bonus shares during the period. The bank issued a bonus of 1 for 6 shares during the period. The dearth of bonus issues from the banks in the last five years indicates a change in the policy of giving back to shareholders through bonus issues by the banks, a common corporate action observed by the banks in the past.

This mixed performance is similar to the performance in other sectors though banking stocks have given a higher dividend income when compared to companies in other sectors.



The return on investment in the bank has been the most impressive even though the financial performance of the bank has been relatively modest. This indicates that the performance is largely due to an increase in market sentiment for the bank which led to a higher share price.


While the bank is one of the smaller players in the sector, its financial performance has been impressive, possibly because of its new focus on digital strategy. Recently, Wema Bank embarked on a Share Reconstruction Exercise via a Scheme of Arrangement so that the bank is appropriately positioned for a capital raising exercise of up to N40 billion. One share was retained for every three shares held in the Share Reconstruction Exercise. This exercise is responsible for the significant increase in the bank’s share price from 52 kobo in 2018 to N3.06 in 2022.
It is expected that the injection of additional capital will further improve the already impressive performance of the bank. It must be noted that while there was a significant increase in price as a result of the reconstruction exercise, the value of the portfolio was retained.


The bank has continued to enjoy business and financial growth over the years. This is reflected in the asset base and profitability and overall return to shareholders through consistent and increasing dividend payments. The bank now ranks as one of the leading Tier-2 banks in the country.


The bank has continued to restructure its business and operations with a key focus on technology. The positive impact of the strategy has been reflected in the sustained positive performance of the bank. The potential for further improvement in growth can, however, be further explored.


The bank is the pioneer in the non-interest banking sector. The bank, which struggled in the past, has now recorded an increase in its customer base, asset growth and profitability. The bank commenced dividend payments in 2021, and it is poised to continue its growth path into the future.


The bank’s performance has improved lately following the clean-up of its non-performing loan portfolio. This has put the bank on the path to increased profitability and business growth. It has also driven a positive sentiment for the shares of the bank in recent times.


The bank is one of the top-tier banks with increasing top-line and bottom-line growth over the years. The bank was the first to report N1 trillion in total assets. The improved performance is evident in the bank’s dividend payout to shareholders. Despite the good performance, its share price movement has been sluggish.


The bank continued its strategic quest to become Africa’s leading bank. A move in this direction was the merger with Diamond Bank. However, this has not driven the expected increase in performance. The recent financials showed improvements in business fundamentals, which could drive future performance.


The bank has continued to maintain its good business and financial performance. The dividend yield is one of the highest in the sector in recent times though market sentiment for the bank shares has not improved as expected.


The bank has been one of the top-performing banks. Despite having good business fundamentals and financial performance, the return on investment has been low.


The bank has not recorded any significant change in its business or improvements in performance. This is reflected in the non-payment of dividends in the last five years and the poor market performance.


The future of the Union Bank has been a subject of speculation since the intervention of the Central Bank of Nigeria (CBN) some years ago. The situation was made worse by the large flat performance of the bank in the last few years. However, the recent acquisition of the bank by Titan Trust Bank Limited has put the bank on the radar of investors who are monitoring the strategic moves for improvement in operations and financial performance by the new management.


The bank is one of the top-tier banks. The bank has continued to experience increasing top-line and bottom-line growth over the years. However, its recent business and financial performance indices showed that growth has been sluggish. The recent restructuring of the bank into a holding company has not translated to expected performance. This has resulted in the decline of sentiment for the bank’s shares and consequently, a significant loss of return for investors.


The bank’s performance has been affected by weak business fundamentals between 2018 and 2020. There was an improvement in 2021 and 2022 due to restructuring in the business of the bank. However, market sentiment for the bank has remained flat, and recovery of lost value seems elusive

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